The probability of a loss consequent to failure to comply with contractual conditions, untimely performance or non-performance by the Borrower of his/her/its obligations to the Bank. The minimization of a credit risk is a process that incorporates the borrower solvency checks, loan portfolio diversification, accumulation of reserves against a loan, taking out the insurance of collateral and loans to compensate for possible losses incurred through loans and debts of the equal status, also, the employment of a special decision-making procedure with regards to high-risk credits and the compliance with the requirements for elaboration of long-term loan settlement conditions and for the writing-off of liabilities.
The risk management is done at “Bank Eurasia” OJSC in accordance with the Rules of Application of the Corporate Governance Standards at Banks and the Risk Management Standards of the Central Bank of Azerbaijan, the Basel Recommendations for the Management of Risks at Credit Institutions, the Rules of Risk Management at Banks, the Charter of the Bank as well as the Bank’s Strategic Plan. The other governing documents are the current laws, the Risk Management Policy of the Bank, the Methodology for the Risk Management, the Internal Regulations and last but not least, the pertaining Procedures. Working to profit and increasing the capital are the staple principles in the management of risks.
The risk management process consists in controlling and minimize risks by defining and assessing the risks inherent in the operations of the Bank as well keeping the risk accounting and determining the admissible risk limits.